2016 (8) TMI 1512 - AT - Income Tax

Confirmation of Penalty Under Income Tax Act Section 271(1)(c) for Unexplained Credit Balances

The tribunal confirmed the penalty imposed under section 271(1)(c) of the Income Tax Act as the assessee failed to justify unexplained credit balances, ... Penalty levied u/s 271(1)(c) - addition made towards introduction of capital in partners account and towards unexplained credit - HELD THAT:- Assessee or his representative could not bring out any materials to establish that the additions are made and sustained due to possible interpretations of the Act or difference of opinion. It is purely a factual case where the assessee was not able to establish the genuiness of the credits in the assessee’s current account in the partnership firm where the assessee is the Managing Partner and other credits in his books of accounts which is elaborately discussed in the orders of the Revenue. These aspects of the case lead to the fact that the assessee has concealed his income. In such circumstances, we do not find it necessary to interfere with the order of CIT (Appeals). Accordingly we hereby confirm the order of the CIT (Appeals). Appeal of the assessee is dismissed. Issues:Penalty under section 271(1)(c) of the Income Tax Act for unexplained credit balance and cash credit.Analysis:1. Issue of Penalty under Section 271(1)(c):The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) sustaining the penalty levied by the Assessing Officer under section 271(1)(c) of the Income Tax Act. The penalty was imposed for the addition made towards unexplained credit balance in the partner's current account and unexplained cash credit. The Assessing Officer had made these additions after conducting a survey and completing the assessment under section 147 r.w.s 143(3) of the Act. The Commissioner of Income Tax (Appeals) upheld the penalty since the assessee failed to provide evidence justifying the credit balances. The assessee did not appeal against the Assessing Officer's orders, and it was noted that the assessee had agreed to the additions. The Commissioner relied on legal precedents to support the imposition of the penalty even when the assessee had agreed to the additions. The tribunal found that the assessee could not establish the genuineness of the credits, leading to the conclusion that the income was concealed. Therefore, the tribunal confirmed the order of the Commissioner of Income Tax (Appeals) and dismissed the appeal of the assessee.2. Confirmation of Penalty by Tribunal:The tribunal's decision was based on the lack of evidence presented by the assessee to justify the credit balances in question. The tribunal noted that the additions were factual in nature and not a result of differing interpretations of the law. The tribunal also highlighted that the assessee's failure to establish the genuineness of the credits indicated a case of income concealment. By referencing legal judgments, the tribunal supported the imposition of the penalty under section 271(1)(c) of the Act. The tribunal concluded that there was no need to interfere with the decision of the Commissioner of Income Tax (Appeals) and upheld the penalty. The confirmation of the penalty by the tribunal was based on the factual findings and the failure of the assessee to provide sufficient evidence to counter the additions made by the Assessing Officer.In summary, the tribunal upheld the penalty imposed under section 271(1)(c) of the Income Tax Act due to the assessee's inability to substantiate the unexplained credit balances, leading to a conclusion of income concealment. The tribunal's decision was supported by legal precedents and the factual nature of the case, ultimately resulting in the dismissal of the assessee's appeal.